Factors to Consider When Choosing Payroll Software | greytHR
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Factors to Consider When Choosing Payroll Software

The move from a manual payroll system to an automated one can save a lot of time. The good news is that most of these solutions can be integrated with time, attendance & leave management systems and accounting systems.

The right payroll solution not only helps in faster and accurate Payroll Processing but also keeps the employees, management and regulatory bodies happy. There are some factors that must be considered while selecting a payroll software.

Ease of Operation

The payroll function can be very cumbersome. It requires a system that has comprehensive but straightforward workflows. If the software is intuitive, it reduces the need for software training and guidance. Also, the company that uses it has to ensure that the software provider has provided updated documentation that is easily accessible.


As the organization increases in size, the software has to address the changing needs. The needs can be in terms of the employee data it processes or features for leave and Attendance Management, reimbursement, etc. The software package should also offer optional advanced features at a reasonable price.

Employee Self-Service Module

One of the primary payroll input providers is the employee. The employee provides information such as income tax-saving investment declaration, type of flexible benefit opted, etc. Manual data entry and form submission are the most common challenges employees face. An Employee Self-Service (ESS) Portal automates and expedites multiple tasks.

Time Management

This module is used to track the time spent on projects or specific activities. Consulting firms that manage critical projects require a robust time-management module for tracking time. Also, this data may be used for billing clients.


While most small organizations go for a manual attendance system, medium and large organizations have started using smart, automated tools such as the biometric method, auto-tracking via system log-in, access cards, iris capture, etc. The data is stored in a system and linked to the payroll software that uses this data to calculate attendance days, overtime, etc. For seamless payroll processing, the software has to support attendance management and must be configurable with access control machines.

Leave Management

In every organization, employees are entitled to take certain types of leave like privilege leave/annual leave, casual leave, sick leave, holiday, etc.

If the software has a leave management feature, HR can directly credit the leave balance to the account of every eligible employee. When required, the employee can apply for leave through the system. A good system should also be able to define a workflow to notify the employee’s manager for approval or rejection. A robust payroll software with a built-in leave management feature can help attain accurate payroll.

Integration with the Accounting System

The accounting or ERP system needs to record every financial transaction, including payroll information like department-wise employee cost and individual payroll components like reimbursements, tax due and paid, etc. Some payroll solutions have integration with accounting software via an API (A way to push data directly from one software to another).

In the absence of such integration, the payroll officer must provide all transaction details to the accounts department. The accountant then manually posts it in the form of journal entries in the accounting or ERP software like Tally ERP, SAP, QuickBooks, etc. These integrations can help the finance and payroll team work together and avoid any manual entry of data.

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Factors to Consider When Choosing Payroll Software